Fiat Seeks to Dismiss GM's Racketeering Lawsuit -- WSJ

By Nora Naughton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 25, 2020).

Fiat Chrysler Automobiles NV filed two motions Friday seeking to dismiss a lawsuit brought by crosstown rival General Motors Co., arguing that GM doesn't have grounds to bring a racketeering case alleging bribery of union officials.

In court documents filed Friday in Michigan, Fiat Chrysler argues GM's lawsuit doesn't adequately meet the requirements for proceeding with a civil case under the Racketeer Influenced and Corrupt Organizations Act, or RICO. That includes lacking an ability to prove the Italian-American auto maker was operating a criminal enterprise through its relations with the United Auto Workers union, the court filings show.

The company also claims GM isn't the primary victim of the alleged bribery scheme, another requirement for moving forward with the lawsuit, according to Fiat Chrysler's motion. GM has until March 9 to respond.

GM stands by the legal and factual underpinnings of its lawsuit, the company said in a statement Friday.

GM filed its lawsuit against Fiat Chrysler in November, in a 95-page complaint that alleged its Detroit competitor paid off union officials over several years to gain a labor-cost advantage in contracts negotiated for tens of thousands of blue-collar workers at U.S. factories.

The legal dispute is a rare public clash between two large car companies who compete head-on in key vehicle categories in the U.S., including pickup trucks, where Fiat Chrysler's Ram brand has been making inroads against GM.

The confrontation comes as Fiat Chrysler's profitability has improved in the U.S. and it is trying to execute a proposed merger with France's PSA Group that, if completed, would create an auto-making giant that would rival GM in total global sales.

General Motors, the U.S.'s largest by sales, claims in the lawsuit that Fiat Chrysler's then-chief executive, Sergio Marchionne, directed the bribery scheme, looking to purposely hurt GM and pressure its rival into merger talks.

Mr. Marchinonne had publicly lobbied for merger talks with GM in 2015 but GM executives declined his advances. The lawsuit alleges Mr. Marchionne, who died in 2018, then appealed to top United Auto Workers officials to support his merger effort, including the union's former president.

GM built its case largely on court documents stemming from a yearslong federal corruption investigation of top officials at the UAW and labor-relations executives at Fiat Chrysler. The probe became public in 2017 and has since widened to the union's GM department and into the top ranks of the UAW, leading to 11 convictions or guilty pleas so far.

In its lawsuit, GM claims Fiat Chrysler bribed UAW officials with money and gifts to win better contract terms and lower costs for its unionized workforce. The two auto makers are direct competitors in the U.S. market, where all of their factories use UAW-represented workers.

GM has said Fiat Chrysler's alleged conduct "inflicted massive direct damage," though it hasn't pegged an amount it is seeking to recover. GM could seek damages of more than $6 billion, analysts at JPMorgan Chase have estimated.

Fiat Chrysler is also asking to put a hold on the discovery process until the motion to dismiss is decided by a federal judge, according to the court documents filed Friday.

GM has said it filed the suit in November to get ahead of the four-year statute of limitations on civil RICO cases that was set to expire. But Fiat Chrysler, in its legal filings, argues GM's claims are outside the statute of limitations because the damages laid out in the lawsuit would have begun before GM signed its 2015 contract with the UAW.

Mike Colias contributed to this article.

(END) Dow Jones Newswires

January 25, 2020 02:47 ET (07:47 GMT)

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